For Asia, the worst effects of Trump’s war on Iran are yet to come

A pedestrian walks past a petrol station in Tokyo, Japan, on March 18.

Photo: EPA The law of unintended consequences, a theory popularised by American sociologist Robert K Merton, has rarely been more applicable to any situation than to US President Donald Trump’s war with Iran.

Those consequences will be far greater than generally imagined.

Their impact will fall heavily on Asia, the world’s most energy-import-dependent region and will almost certainly hurt US ally Japan more than it will the US’ main rival, China.

Indeed, China may even emerge from the crisis with an enhanced international image.

There is widespread agreement that the assault on Iran by US and Israeli forces was ill advised and ill planned from a global perspective.

But its economic and financial consequences are only beginning to be understood.

This is not a typical “oil shock” of the kind endured by Asia and other key regions in recent decades.

Its most obvious impact is on energy supply and prices, but it also critically affects petrochemicals, manufacturing supply chains, energy infrastructure and transport networks, as well as financial markets.

Because of the US bombing of Iran, the whole world is in crisis, especially Asia-Pacific markets.

Around 80 per cent of the region’s total energy imports pass through the vital conduit of the Strait of Hormuz, now effectively closed by Iran as a countermeasure.

Crude oil prices increased by nearly 40 per cent between February and March while the price of liquefied natural gas shipments to Asia rose by almost two-thirds, according to the World Bank.

Cargo ships in the Gulf, near the Strait of Hormuz, are seen from northern Ras al-Khaimah, in the United Arab Emirates, on March 11.

Photo: Reuters Millions of words of analysis have already been spoken or written about the conflict, but some of the most telling were voiced at an expert panel event held at the Foreign Correspondents’ Club of Japan in Tokyo on March 24.

If the conflict only lasts a short time – one to two months – the effects could be “modest”, Matteo Lanzafame, director of the Asian Development Bank’s macroeconomic research division, suggested at the event.

But in a more prolonged war, there will be “significant impacts both on growth and inflation in the region”.

In such a scenario, Asian economies could “go into significant recession or contraction [in employment]” although the effects will vary from country to country, he said.

One determining factor will be th

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